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Question
A bond has a face value of $1,000 and coupon payments of $120 annually. This bond matures in three years and is selling in the market for $1,160. Market interest rate is 6 percent. What is this bond's duration?
A. 3 years
B. 5.71 years
C. 1.96 years
D. 2.71 years
E. None of the options is correct.
Answer
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